U.S. stocks closed sharply lower on Tuesday, with a late-day rally failing to hold, as investors and businesses assessed the impact of newly imposed tariffs on key trade partners. The Dow Jones Industrial Average dropped 1.6%, the S&P 500 fell 1.2%, and the Nasdaq Composite declined 0.4%. This marked the second consecutive day of broad-based losses for U.S. equities, amid mounting concerns over the economy’s health and the uncertainty surrounding the Trump administration’s policies. Both the S&P 500 and Nasdaq have now erased all the gains made since the November presidential election.
On Tuesday, the U.S. rolled out long-awaited 25% tariffs on imports from Canada and Mexico, while raising tariffs on Chinese goods to 20%. In response, China and Canada quickly announced retaliatory measures, with Mexico also indicating it would unveil countermeasures by Sunday. The White House contends that these tariffs will encourage more investment and job creation in the U.S., while many investors are fearful that the trade measures will lead to inflation, stifle economic growth, and harm companies that rely on global markets.
Corporate Impact: Tariffs Hit Retailers, Automakers, and Financials
Retailers felt the brunt of the market decline. Target (TGT) shares fell 3% despite posting stronger-than-expected earnings, as the company warned that consumer uncertainty and tariff-related issues would hurt its upcoming quarterly results. Best Buy (BBY) plunged 13% after reporting solid earnings, but cautioning that the tariffs would likely lead to higher prices, which could hurt consumer demand.
Automakers, particularly those with heavy exposure to international markets, also suffered. Stellantis (STLA), the parent company of Jeep and Chrysler, and General Motors (GM) both dropped over 4%, while Ford (F) fell nearly 3%.
The financial services sector led the S&P 500’s decline, with Bank of America (BAC) and Citigroup (C) each falling more than 6%. Other major financials, including Wells Fargo (WFC), JPMorgan Chase (JPM), Goldman Sachs (GS), and American Express (AXP), also saw significant drops, contributing to a 3.5% decline in the S&P 500’s financial services sector index.
Technology Sector Mixed; Notable Gains in Bitcoin and Select Stocks
The technology sector posted a mixed performance on Tuesday. Tesla (TSLA), which has lost about a third of its value since the beginning of the year, fell more than 4%. Meanwhile, Apple (AAPL), Amazon (AMZN), and Meta Platforms (META) all saw declines. However, AI chipmaker Nvidia (NVDA), which had dropped nearly 9% on Monday, rebounded with a nearly 2% gain, and other tech giants like Microsoft (MSFT), Alphabet (GOOG), and Broadcom (AVGO) also saw positive movement.
Among the few notable gainers, Super Micro Computer (SMCI) surged over 8% after a steep 13% drop the previous day. Walgreens Boots Alliance (WBA) rose nearly 6% following reports that it was nearing a $10 billion deal to be taken private. MicroStrategy (MSTR), a major holder of Bitcoin, jumped nearly 10%.
Market Indicators: Treasury Yields and Commodities
The yield on the 10-year Treasury note rose to 4.24% from 4.18% at the previous close, reversing an earlier dip to 4.11%—its lowest level since October. The yield is closely watched as an indicator of economic sentiment, with declines typically signaling weaker economic expectations.
In commodities, gold futures rose 0.9%, settling at $2,930 an ounce, as investors sought safe-haven assets amid economic uncertainty. Meanwhile, West Texas Intermediate crude oil futures fell 0.5% to $68.05 per barrel.
As the trade war intensifies and economic uncertainties grow, market volatility is expected to remain elevated, with investors continuing to closely monitor the evolving situation.
